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The swapfile is located in /private/vm. The only current way to make it shrink is to reboot the machine.
See the man pages for swaptab for more information.
Note, that putting a space after the comma in /etc/swaptab
(lowat=
There is a short trick which seems to work for several people: type exit in the login panel. This will exit the window server and restart it immediatly. If you are lucky, this will reclaim some space.